There are many factors you will want to assess when evaluating possible subscription models. You can use Elevate Energy’s Community Solar Business Case Tool to evaluate ownership and subscription business models. Important factors to consider include the following:
- Value Proposition:
- Bill credit rate–You should identify the credit, or reduction, you will see on your normal bill per kWh produced and clarify if and how this rate may change over time.
- Upfront payment–Some programs require that subscribers pay a sign-up fee or purchase the panels (this requirement is most common in the direct ownership model).
- Customer offer–You should evaluate the overall financial attractiveness of the available subscription models based on the anticipated costs and bill credits. Given that programs may differ in their subscription models (i.e., whether the customer pays a $/W, $/kWh, or hybrid amount), you should make sure your analysis will provide a holistic, apples-to-apples comparison.
- Price-risk minimization–In some cases, the value of a subscriber’s credit per kWh may vary over time. If this is the case, determine if any subscription models mitigate this potential financial risk. For example, this risk could be reduced by fixing the relationship between the subscription rate and the bill credit rate.
- REC treatment–Identify who will take ownership of the RECs and if they will be retired, transferred to customers, or sold to improve project economics.
- Participation terms:
- Consumption based limits–Because many shared solar policies are based on virtual net-metering policies, it is common for subscription sizes to be limited by a subscriber’s annual electricity usage.
- Participation requirements–Participation may be limited to individuals or organizations that meet a minimum credit score or provide a down payment.
- Subscription transferability–Community solar programs should allow subscribers to take their subscription with them if they relocate within a utility’s service territory and for subscriptions to be transferred to a new party if the original subscriber moves outside the utility’s service territory.
- Project specifications:
- Project size and number of subscribers–You should clarify how big the project will be in size (kW) and how many people the project will be able to serve. Large projects often benefit from economies of scale and can provide more attractive pricing to subscribers.
- Production guarantees and warranty–Clarify if the project provides any guarantees and warranties. This clarification is especially important if the subscription is for a direct ownership model, as subscribers will be financially hurt if the panels they purchase underperform or stop working altogether.
- Subscription contract length–You should identify the length of the subscription agreement.
- Target population (e.g., LMI) subscription:
- Clarify if there are existing carve-outs or incentives for specific target groups. If not, consider using your position as a major off-taker to encourage or require that your project targets customers with low credit scores, customers who live in public housing, and/or customers who participate in other LMI-focused assistance programs.
If no projects are currently being developed that meet your goals, you may want to support the development of a new project by issuing a request for information (RFI) or RFP for projects that will more closely meet your needs. If necessary, city governments may be able to sign a memorandum of support for a project identified through an RFI. The project sponsor or developer would then continue the development process with the memorandum of support as evidence of project subscription. This memorandum can help a project raise lower-cost financing and, in places where regulations have established a project administrator to manage and approve community solar projects, could be submitted as a part of the application process.